By Card Not Present Staff
Fraud pros expend a lot of time and energy in a very stressful environment trying to protect and grow revenue for their companies. Despite the blood, sweat and tears they devote to that task, they often struggle to demonstrate and explain to others—even those in their own organization—the value they provide.
Whether it’s how much money they’ve saved the company or why additional headcount for manual review would benefit the bottom line, fraud managers and analysts must often confront the question, even in the best of times, “how do I get them to understand our value?”
Add an international pandemic to the mix, which has been impacting different e-commerce verticals in different ways, and the question becomes not only more complicated, but more important. If a business doesn’t accurately understand the value of the fraud team or the trust & safety function, they or their teammates may become targets for staff reduction if and when hard choices have to be made.
But, it’s not easy to communicate that value in a timely manner (i.e., before layoffs are announced) across an entire organization and, more importantly, to executives making those decisions.
Card Not Present asked a few current (and former) merchants for their experiences demonstrating their value to their company and advice that has worked for them in the past. Some were able to share their identities with us. Others were not. But all of them have experience that can guide fraud professionals’ efforts when uncertainty can lead to staff cuts or, at best, the inability to get the resources need to be effective.
Know Your Numbers and Let Them Speak
“Right now, I am making risk calculations and presentations for my boss to send around to executives who seem confused about what we do. In my presentations I detail what has happened in previous economic downturns, including fines associated with not doing fraud work in a good way. I've evangelized the fact that the number one department you have to fund right now is the fraud department. I usually give a version of this 'doomsday' speech as well: If you don't get your fraud function done well right now, you might as well shut your doors. So lay off all the sales and marketing people you can find. Even engineers can go, but if you get rid of your fraud people, the company will suffer. It may not be today or tomorrow, but you will get hit. Fraudsters know that now is the time that people are desperate, and they can work quickly and easily on desperate people. So if you're not battening down the hatches and preparing for the onslaught of fraud that's coming, you're making a grave mistake.” - Director of Trust & Safety for a large marketplace
“I think positioning fraud and risk as a form of insurance is a good way for folks not in fraud and risk to understand the ROI of investing in these areas of the business. The ROI that the company will get is the absence of a critical issue, the absence of having to put out a fire and put other more traditional investments and projects on hold.” - Justin Staskiewicz, Fraud Prevention, Whataburger
“Know your key metrics (e.g., approval rate, loss rate, insult rate, manual review rate), how they impact your company’s priorities, and what levers you can pull on to move them. Also, commit to regular reporting. Proactively provide leadership with data showing your key metrics.” - Fraud Prevention leader for large retailer
“Know the true cost of fraud to your business. LexisNexis has a True Cost of Fraud annual study that I often use for my clients. In 2019, that multiplier was $2.97. After accounting for transaction amount, the cost of the product/service, chargeback fees, fraud prevention systems and head count, they calculate that the true impact of $1 of fraud loss is $2.97. Explaining that to your leadership can be a great way to start a conversation around your department’s value to the company.” - Karisse Hendrick, Principal Consultant, Chargelytics Consulting
Explain the Cost to the Business if There Wasn’t a Fraud Team
“The way I make sure to articulate the total value of what we do is to look at the amount of unique attempts to defraud our business in a given time. That can be by a specific device fingerprint, email address, IP address, etc. Pick the data point for your business that you think illustrates unique fraud attempts best and then look at the number of attempts and the dollar amount involved. Then take into account things like friendly fraud or false positives. I present about 90 percent of those unique transactions as chargebacks and dollars as losses. I will usually say, ‘this is what the business should expect to see if our team and the work we do didn’t exist. Without monitoring and constant updates and adjustments, this is what will ultimately be coming through’.” - Justin Staskiewicz
“You can look at things like dollars of fraud saved + chargebacks won - false positives. Understand and be able to articulate what it means if 10 percent, 20 percent, 40 percent, 80 percent of your team was not there. On the flip side, you should have a plan on what you would do with 20 percent more resources on your team as well. What is the cost/benefit and how does that stack up to other areas of the business?” - Kevin Lee, Trust & Safety Architect, Sift
“I'm sure all fraud teams are catching even more scams and abuse right now. If you're not already bragging about how much money your team saves from pure financial fraud, you should talk that up. But then add to it ATO attacks you've thwarted, spam you've taken off the site, scams you've detected (and rules you’ve implemented to stop them going forward), and content that would have brought your company down if left on the site. Make sure you use every financial figure you possibly can right now. If you can speak to money the company saved because of your team’s exploits that would have reduced profits, that's where you need to look right now. Every dollar counts in times of economic downturn and fraud departments are revenue assurance groups. But you've got to sell it and sell it hard.” - Director of Trust & Safety for a large marketplace
Align Your Department’s Goals with the Business Goals
“Fortunately, right now our chargebacks are very low, so what we’re focused on aligns with the rest of the business, in that we try to ensure that we are declining the right transactions and allowing good customers through. I use the analogy that I approach fraud with a scalpel and want to be surgical in the transactions I decline. I can take an axe to the problem, but I don’t want to be in a situation where I have to amputate to keep things from getting out of hand. If we give fraud prevention the proper maintenance, updates and monitoring that it needs, we can continue to be as precise as we are when it comes to fraud and friendly fraud. Addressing the bottom line in this way has worked well for me.” - Justin Staskiewicz
Whatever is most in line with company objectives. If the company is in cost saving/cutting mode, show them how much you can automate and scale the business. Be able to show what you are (literally) saving the company in attempted fraud. If your company is still in growth mode, articulate what your team (if running at 100 percent or more) can unlock for the business. Either way, show what the ROI of your team (down to the people level) is. Make it as easy as possible for your exec team to stack rank your contributions against other segments of the business and show how your team helps enable whatever initiatives bring the company the most value. - Kevin Lee
“Come up with a plan or have options ready. What can fraud do to align with or help drive the company’s priorities during these trying times? Reach out to leadership to offer your team’s support proactively.” - Fraud Prevention leader for large retailer
“I think a big value we’ve been able to get my company to see is that fraud prevention doesn’t just have to be the amount of fraud we decreased or prevented, but also the amount of additional transactions we allowed through by optimizing. The larger payments world also has a lot of value. Understanding approval rates, issuer and network regulations and mandates, interchange, debit routing and a myriad of other topics can also help your team be engaged with the larger aspects of the business. Although they are not directly in my job description, being involved with them and showing how we are avoiding fees and penalties and being optimized is of great value.” - Justin Staskiewicz
“Much of this reminds me when I was a Risk Manager at Google in 2008 and my product had to reduce staff. For better or for worse, I was proud that I was able to show the ROI and impact of my team so we didn't have to do any layoffs or RIFs until marketing, sales and ops teams were nearly at zero people. That didn't happen overnight though. I had to do a lot of road shows and education building so others understood how my team fit into the overall puzzle.” - Kevin Lee
“Especially during uncertain economic times, I work to take on additional tasks or insource work from other groups. If you are using contractors, cut them and take the work into your group. Don't ask if it really is the best place for the work to live right now, just take it and ask questions later. This is your time to be selfish for your team. Think of them first and promise your leadership that you'll do it all (because you know you will). This has always been a winning recipe for me and my groups in desperate times. It may not be the most rewarding work my teams have done and people from other groups may not be pleased with me for taking all the work I can get my hands on, but the time for concessions and thinking of other areas is not now when your and your team’s livelihood is on the line. You can make friends when times are good again, but showing that your team is the one that cannot be spared right now is the only way to survive.” - Director of Trust & Safety for a large marketplace
How to Communicate Value
What’s the best format to share this information? Many merchants have been successful hosting “lunch & learns” or “brown bag lunches,” with a presentation that explains what they do and why it matters. It also enables you to field any questions from other departments. Now that most everyone is working from home, you can adapt this to a “lunch & learn” or “happy hour” via Zoom or another video conferencing platform. It may be hard to get time on the calendar of executives, but if you can confidently tell them how your team is saving or can save a lot of money, put that number in the subject line of your email request. Offer this as good news, as most senior leaders are looking for positive news to share with investors or board members, especially amidst difficult news these days.
For more tactical information on utilizing KPIs to demonstrate the value of your fraud department, we are presenting “Fraud Team Optics: Communicating with Upper Management Using Practical KPIs” on May 6 as part of the CNP Virtual Summit series. Sign up at cnpsummit.com.